Taking out loans, a little extra than needed for emergancies? BUT already have small savings?

[kilpty]

Hello,
Incoming M1 here...

I have more than enough loan options from unsubsidized/Perkins loans to cover tuition and then some (15 grand I won't have to use for tuition books etc.

I have about 10,000 savings from working the past year.
My very generous father is going to pay for living expenses while I am in medical school.

How much extra loan should I take out on top of my planned expenditures for "emergency loan money" if at all since I have 10,000$ of "emergency cash" -although was hoping to save this for residency moving expenditures etc . I was thinking maybe 2,000 extra my first year and see how it goes. I really don't want to take out loan money I don't need since it will gather interest. Any advice? Other medical student perspectives on needed a little "give room" with loan money and how much was helpful vs. too much?


Thanks!
Sorry if this a repetitive thread, I couldn't find one very similar. If there is please send it my way!

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[RangerBob]

I think $10,000 is more than enough emergency funds. My emergency fund was usually only about $2-3,000 throughout medical school. I think $5,000 would have been more ideal, so I'd be more prepared if my car died, etc. I think how much you should take really depends on your comfort level---$2,000 isn't really that much and the interest won't be that bad, and while I don't think you'd need it, I'd say it's worth the psychological comfort if it brings any.

Remember--if you're borrowing $15,000 less than the cost of attendance each year, then in your 4th year you can borrow up to the max (and have up to $15,000 extra) to pay for away rotations, interviews, residency moving expenses, etc. You could wait until then to borrow additional money, rather than borrowing more now. Students who take out the max each year have to get a private residency and relocation loan to pay for those same expenses, and as those loans are uncertified the rates are usually around 7% (9% if fixed rate). Depending on the specialty you apply to (some pay for many expenses), the geographical region you apply to (interviewing across the country adds up quickly), and how much stuff you have and how far you have to move for residency (a big UHaul towing your car across the US uses a ton of gas, plus the rental expense), you can easily approach that $15,000 amount (or exceed it--but I don't know anyone who was that unfortunate). Most students won't approach that--some even spend less than $1000 for all interviewing-related costs.

Aside from your car potentially breaking down, those 4th-year expenses will likely be the only major expenses you incur that would require a good amount of savings. That and a 2-4 week trip to Europe that some 4th years take prior to starting internship. I couldn't afford that myself, so I took a 5-week camping trip with my wife across the US. Point being--you'll probably want to do something special/nice prior to starting internship, so if you have something major in mind (climbing Mt Everest) then just plan ahead to make sure you can afford it.

The odds are with your $10,000 now and ability to borrow up to an extra $15,000 in 4th year in federal loans, you probably don't need to even think about any of this until 4th year financial aid comes out. Others though would benefit from planning ahead (as early as first year) so they can avoid taking out that high-interest residency/relocation loan. I wish it occurred to me--I'm one of those who took out the private loan, and if I had been more careful with planning earlier on, I probably could have avoided it.

 

[kilpty]

Thanks! I really appreciate the advice and perspective.